Octavian Sends Letter to Fellow EnerCare Shareholders

Octavian Sends Letter to Fellow EnerCare Shareholders07:00 EDT Thursday, April 12, 2012
NEW YORK (Business Wire) -- Octavian Advisors, LP, the largest shareholder of EnerCare Inc. (TSX:
ECI), which owns approximately 13% of EnerCare's outstanding common
shares and has been a shareholder for more than two years, today sent
the following letter to its fellow shareholders urging them to vote
their YELLOW form of proxy FOR the addition of Octavian's highly
qualified nominees to EnerCare's Board of Directors at the annual and
special meeting of shareholders scheduled to be held on April 30, 2012.
April 12, 2012
Dear Fellow Shareholders:
VOTE YOUR YELLOW FORM OF PROXY TODAY TO
ELECT DIRECTORS WHO WILL LOOK OUT FOR YOUR
BEST INTERESTS
With the April 30 annual and special meeting of shareholders (the
“Meeting”) just a few weeks away, we strongly urge you to vote your YELLOW
form of proxy today to expand EnerCare's Board to 10 members and elect
four highly qualified directors: Beth Horowitz, Graham Senst, T. Richard
Turner, and Richard Hurowitz. These experienced nominees – three of
whom are completely independent and one of whom represents the company's
largest shareholder – will have the best interests of shareholders as
their top priority. If elected, they will work tirelessly to address
EnerCare's long-term underperformance under the current Board of
Directors.
As a long-term shareholder in EnerCare that manages the investments of
pension funds, mutual funds, families, and other investors, Octavian has
a strong interest in EnerCare's success and future growth and only wants
to do what is best for the company and ALLits shareholders. We
have continued to purchase shares of EnerCare because we believe the
company has tremendous potential that the current Board is failing to
unlock.
ENERCARE'S BOARD HAS DESTROYED VALUE
Do not let EnerCare distract you from its lackluster performance with
self-serving calculations that conspicuously exclude dividends from the
benchmark index while simultaneously including them for EnerCare. The
ugly fact is that since EnerCare's IPO in 2002 until April 27, 2011, the
last trading day before Octavian announced it may seek changes to
EnerCare's Board composition, EnerCare shares were up only 57% versus an
increase of 145% for the S&P/TSX Composite Index. On the contrary, since
Octavian made its announcement on April 28, 2011, EnerCare shares are up
46%. Over the same period, the Canadian market has decreased by 12%.*
IT IS TIME FOR CHANGE
For over two years, Octavian has been urging EnerCare's Board to address
the undervaluation of your EnerCare shares and to explore all available
options to enhance value for shareholders. In fact, IT WAS OCTAVIAN
THAT RECOMMENDED THAT ENERCARE INCREASE ITS MONTHLY DIVIDEND a year ago,
well before the Board finally authorized the recent increase.
Octavian believes there are several other initiatives that EnerCare
should at least examine, which it has failed to do so far, that have the
potential to significantly increase the value of your investment,
including:
Payment of a Special Dividend - An increase in leverage by less
than one turn could potentially permit the company to pay out to
shareholders a special dividend of $2.50 per share while maintaining
the regular monthly dividend.
Spin-off of the Submetering Business - A spin-off of EnerCare's
fast growing but cash burning submetering business could potentially
lead to a higher valuation than currently implied, as investors
seeking primarily growth rather than dividends could participate
directly while the rental business would benefit from a reduced cash
drain allowing for higher dividends.
Share Buyback – A share buyback could provide the company with
the ability to enhance the value of shareholders' investment by
increasing earnings per share. Furthermore, by investing in its own
stock, the company would send a strong signal to the market,
demonstrating the Board's own confidence in EnerCare's future growth.
Sale of the Company - A sale of the company should also be
explored as one potential alternative, as private market valuation
could be significantly higher than EnerCare's current share price.
Based on the on Board's actions to date, it is clear that under the
current leadership, the Board has not even been willing to consider
these alternatives.
YOUR INVESTMENT IS AT GREAT RISK
Under James Pantelidis' leadership, the current Board has severely
mishandled your investment. We believe that your EnerCare shares should
have a significantly higher value in today's market but, as a result
of the current Board's many missteps, shareholder value has been
destroyed. The Board's long line of mistakes includes:
Missing strategic opportunities, including an opportunity to sell the
company in 2007 at the high premiums that were then available and
which a major competitor took advantage of.
Selling EnerCare shares at $4.95 per share in a dilutive and
unnecessary offering.
Failing to adequately prepare for competitive threats.
Ignoring regulatory risks and making an acquisition in an industry
that regulators subsequently shut down for almost two years.
DO NOT EXPOSE YOUR INVESTMENT TO CONTINUED MISMANAGEMENT UNDER THE
LEADERSHIP OF JAMES PANTELIDIS
Rather than working to create value for EnerCare shareholders, the
Board under the leadership of Mr. Pantelidis has focused on furthering
its own agenda and taken repeated actions to entrench itself and
disenfranchise shareholders.
In fact, Mr. Pantelidis has exhibited an extreme hostility towards
shareholders, going to great lengths to deny shareholders any Board
representation. Some recent examples of Mr. Pantelidis' behavior include:
Insisting on serving as chair of the Meeting despite his clear
conflicts of interest in doing so, and failing to agree to our
reasonable request that a mutually agreed-upon independent chair be
appointed to conduct the Meeting.
Leading a director nomination process that was never intended to
include representatives nominated by shareholders, and in particular
the Octavian nominees.
Cynically breaching the company's individual voting policy by taking
the position that it will not apply at the Meeting although it was
adopted for the stated purpose of ensuring that each director of the
Board “should carry the confidence and support of EnerCare's
shareholders.”
Circulating a deliberately confusing form of proxy that could
potentially result in an absurd outcome of twelve directors being
elected at the Meeting, without providing shareholders with any
explanation as to how this outcome might be addressed at the Meeting.
If the current Board continues to control the direction of the company
with no shareholder oversight, your investment will remain at high risk.
YOU NEED INDEPENDENT REPRESENTATIVES ON THE BOARD
We believe immediate change is needed in order to get EnerCare back on
the right path and increase value. Shareholders deserve to have
independent and experienced representatives on the Board who will
protect their interests and examine all available value-creating
opportunities. Octavian's highly qualified, independent nominees have
the skills and proven expertise to help guide the company in the right
direction.
If elected, the Octavian nominees would be a MINORITY of the
directors and therefore would not be able to take actions without
agreement from the rest of the Board. Our nominees would aim to
effect positive change by working constructively with their fellow
directors to correct EnerCare's substantial long-term underperformance
and increase the value of your shares.YOUR VOTE IS IMPORTANT – VOTE YOUR YELLOW FORM OF PROXY
TODAY
We urge you to support Octavian's proposal to expand the Board to 10 and
elect the four highly qualified Octavian nominees and six of the current
directors. Octavian is seeking only one Board seat for itself – the
three other candidates are completely independent, highly experienced
professionals who have had no prior relationship with Octavian and were
identified by an executive search firm for their ability to create value
for EnerCare and its shareholders.
Please sign, date, and return the enclosed YELLOW
form of proxy today. In order for your vote to be eligible, we must
receive your proxy in advance of the deadline of 10:00 a.m. (Toronto
time) on April 26, 2012. You may do this even if you have previously
signed a form of proxy in support of management – the more recent proxy
automatically revokes the earlier one.
If you have questions about how to complete your YELLOW
form of proxy, please call MacKenzie Partners, Inc. at 1-800-322-2885
(toll-free) or 212-929-5500 or e-mail enercare@mackenziepartners.com
and they will assist you. Collect calls will be accepted.
We look forward to working together with you to achieve positive change
at EnerCare that will increase the value of your investment.
Yours sincerely,
Richard A. HurowitzChairman and Chief Executive OfficerOctavian
Advisors, LP
* Calculations include dividends but do not assume they are
reinvested.
* * *
For more information on how to vote your YELLOW form of proxy, as well
as access to other important materials, please visit www.ShareholdersForEnerCare.com.
About Octavian Advisors, LP
Octavian Advisors, LP is a global investment firm with offices in New
York and London. The firm focuses on special situations and distressed
investments in international markets, and has successfully invested in
over 40 countries on six continents. Octavian currently manages
approximately $1 billion for leading endowments, foundations, pension
funds, family offices and institutions.
Cautionary Statement Regarding Forward-Looking
Information
Certain information in this press release may constitute
“forward-looking information”, as such term is defined in applicable
Canadian securities legislation, about the objectives of Octavian as
they relate to EnerCare, the potential impact of certain initiatives on
the value of EnerCare shares, the impact of the Octavian Nominees, if
elected, on the financial condition, results of operations, business
strategies, revenue enhancements, competitive position of EnerCare, the
risks related to shareholders' investment in EnerCare if the current
board continues to control the direction of EnerCare, and other matters.
All statements other than statements of historical fact may be
forward-looking information. Forward-looking information is often, but
not always, identified by words such as “seek”, “anticipate”, “plan”,
“continue”, “estimate”, “expect”, “may”, “will”, “would”, “project”,
“predict”, “potential”, “targeting”, “intend”, “could”, “might”,
“should”, “believe” and similar expressions.
Material factors or assumptions that were applied in providing
forward-looking information, include, but are not limited to, EnerCare's
future growth potential, its results of operations, future cash flows,
the future performance and business prospects and opportunities of
EnerCare, the election of the Octavian Nominees, the ability of the
Octavian Nominees, if elected, to effect positive change at EnerCare,
that the six of the current directors recommended by Octavian for
election to EnerCare's Board at the annual and special meeting of
shareholders scheduled to be held on April 30, 2012 (the “Management
Nominees”) will consent to serve on EnerCare's Board with the
Octavian Nominees and the current general regulatory environment and
economic conditions remaining unchanged.
Forward-looking information contained in this press release reflect
current expectations of Octavian regarding future events and operating
performance of EnerCare, and speak only as of the date of this press
release. Such forward-looking information is based on currently
available competitive, financial and economic data and operating plans
and are subject to known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements
of EnerCare, or general industry results, to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking information. Recent events in global
financial and credit markets have resulted in abnormally high market
volatility and a level of uncertainty not seen in decades. Such
uncertainty may continue to impact the global, North American and
Canadian economies in unpredictable ways and may impact the results of
EnerCare in a manner which is currently impossible to ascertain. Many
other factors could also cause EnerCare's actual results, performance or
achievements to vary from those expressed or inferred herein, including
without limitation, the possibility that the anticipated benefits from
the election of the Octavian Nominees cannot be fully realized or may
take longer to realize than expected; that the six Management Nominees
will not consent to serve on EnerCare's Board with the Octavian
Nominees; the ability of EnerCare to retain and hire key personnel and
maintain relationships with customers, suppliers or other business
partners following the election of the Octavian Nominees; the impact of
legislative, regulatory, competitive and technological changes; the
state of the economy; credit and equity markets; availability of credit
and other financing; and the financial markets in general. Many of these
risks and uncertainties could affect EnerCare's actual results and could
cause actual results to differ materially from those expressed or
implied in any forward-looking information provided by Octavian. The
impact of any one factor on a particular piece of forward-looking
information is not determinable with certainty as such factors are
interdependent upon other factors, and Octavian's course of action would
depend upon its assessment of the future considering all information
then available.
Should any factor affect EnerCare in an unexpected manner, or should
assumptions underlying the forward-looking information prove incorrect,
the actual results or events may differ materially from the results or
events predicted. All of the forward-looking information reflected in
this press release is qualified by these cautionary statements. There
can be no assurance that the results or developments anticipated by
Octavian will be realized or, even if substantially realized, that they
will have the expected consequences for EnerCare. Forward-looking
information is provided and forward-looking statements are made as of
the date of this press release and except as may be required by
applicable law, Octavian disclaims any intention and assumes no
obligation to publicly update or revise such forward-looking information
or forward-looking statements whether as a result of new information,
future events or otherwise.
Investors:Mackenzie
Partners, Inc.Larry Dennedy, 212-929-5239ldennedy@mackenziepartners.comorMackenzie
Partners, Inc.Charlie Koons, 212-929-5708ckoons@mackenziepartners.comorMedia:Sard
Verbinnen & CoJonathan Doorley, 212-687-8080jdoorley@sardverb.com

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